2018 (2) TMI 1550 - AT - Central Excise

Refund claim - interest charged on the tax paid prior to the commencement of five year period of limitation - Held that - Interest is a burden that accrues to ineligible utilisation of amounts that otherwise should have been at disposal of the public exchequer. Undoubtedly, no tax or duty is recoverable for the period that lies beyond the limitation prescribed in the statute and such tax not being recoverable, interest burden thereon should not lie even if the tax by sheer mischance, ended up in the funds of the Government of India - the appellant has closed the doors to his claim of refund of interest on ground of equity - appeal dismissed - decided against appellant.

Summary

Issues:
Claim for refund of interest paid beyond the five-year limitation period under section 73 of Finance Act, 1994.

Analysis:
The case involved M/s Lumax Auto Technologies Ltd, which had paid service tax along with interest due to an audit pointing out their liability as a recipient of 'intellectual property service' under section 66A of the Finance Act, 1994. The audit objection period exceeded the five-year recovery limitation period specified in section 73 of the Act. The company filed a claim seeking a refund of the interest paid prior to the five-year limitation period. The claim was rejected by lower authorities, leading to the appeal against the order-in-appeal dated 1st January 2015.

The appellant argued that the limitation period of five years for recovery proceedings under section 73 implied that interest could not be demanded for periods beyond that, and the statutory restriction on tax recovery deprived the authority to charge interest. However, the Authorized Representative contended that the tax payment along with interest was voluntary, and the appellant had accepted liability by seeking waiver under section 73(4)(A) of the Finance Act, 1994. The appellant had also availed credit under CENVAT Credit Rules, 2004, for the entire tax amount discharged.

The Tribunal noted that the appellant sought relief based on equity, claiming that interest charged beyond the recoverable tax period should not be owed to the public exchequer. While acknowledging that no tax or duty is recoverable beyond the statutory limitation, the Tribunal observed that the appellant had benefited from taking credit for duties that were otherwise not recoverable. By availing this advantage, the appellant waived the right to claim a refund of interest on equity grounds.

Ultimately, the Tribunal concluded that there was no justification for the appellant's claim, and the appeal was dismissed. The judgment emphasized that the appellant, having benefited from the credited duties, could not seek a refund of interest on the basis of equity, as it had voluntarily accepted the liability and closed the opportunity for a refund claim.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the legal principles governing the case, and the Tribunal's reasoning leading to the dismissal of the appeal.